Former Lido Holder Sues Lido DAO Over Investment Losses, Alleges Unregistered Security

According to Cointelegraph: A former holder of Lido tokens has filed a class action lawsuit against Lido's governing body, Lido decentralized autonomous organization (Lido DAO). The lawsuit charges that the Lido token is an unregistered security and that Lido DAO is responsible for the plaintiff’s losses ensuing from the token’s value decline. Filed in a San Francisco US District Court, the lawsuit alleges that Lido DAO along with venture capital firms Paradigm, AH Capital Management, Dragonfly Digital Management, and investment management company Robert Ventures, control 64% of Lido tokens, leaving ordinary investors incapable of having an influential say in governance matters. As per the court document, Andrew Samuels, the Lido holder who filed the lawsuit, claims that Lido DAO was initially established as a partnership comprising institutional investors. It later decided to offer a potential 'exit' opportunity by availing Lido tokens to the public via centralized exchanges. The tokens were subsequently bought by Andrew Samuels and numerous other investors and thereafter declined in price, leading to losses for these investors. The lawsuit argues that Lido is a security, as there is apparently a group [between the tokens and investors] whose actions are expected to generate profits for the public. This assertion aligns with statements made by Gary Gensler, the Chair of the United States Securities and Exchange Commission. DeFi Llama's data reveals that Lido, a liquid staking protocol that confers staking rewards and derivative token stETH to users for delegating their Ether to the network of validators, is the leader among liquid staking derivatives, securing more than $19 billion worth of cryptocurrency within its contracts. Despite the all-time high price of $6.41 per Lido governance token recorded during the last bull market on August 20, 2021, it currently trades at $2.08 per coin.